Oil Lower in Wednesday Trade

OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved lower in early trade Wednesday following bearish crude data released late Tuesday from the American Petroleum Institute ahead of the 10:30 a.m. ET weekly supply report from the Energy Information Administration.

"The market's pretty much down on bearish inventories last night from the API," said Dominick A. Chirichella, director of risk management for EMI-DTN. "For the moment the market is overall negative."

A stronger U.S. dollar, which reached a 13-month high in index trading this morning, is also weighing on West Texas Intermediate futures.

Tuesday's API report showed stocks of U.S. commercial crude increased 3.66 million barrel (bbl) for the week ended Aug. 10 compared with market expectations for a 2.9 million bbl decline. Supplies at the key Cushing, Oklahoma supply hub, the delivery location for the West Texas Intermediate crude oil contract, increased 1.66 million bbl that will be the first build in 13 weeks if EIA corroborates the supply gain. EIA shows Cushing stocks at minimum operating levels at 21.8 million bbl as of Aug. 3.

Distillate inventories rose 1.94 million bbl for the week reviewed, far larger than the 900,000 bbl build expected by analysts. EIA shows distillate stocks at 125.4 million bbl as of Aug. 3, 22.3 million bbl or 15.1% below the year ago level. A strong U.S. economy bolstered by manufacturing and freight hauling demands, has increased diesel requirements in 2018.

API reported gasoline stocks declined 1.5 million bbl, nearly double expectations for an 800,000 bbl draw.

Near 9 a.m. ET, the September NYMEX WTI contract stood 93 cents lower at $66.11 bbl, while the October ICE Brent contract was 93 cents down at $71.53 bbl. September RBOB futures were off marginally to $2.0279 gallon while September ULSD contracts traded 2.4 cents lower at $2.1047 gallon.

Brian Whary can be reached at brian.whary@dtn.com